We have just been made aware that the issue of HD inclusion in SDARS receivers may be reviewed in a separate FCC process.

In a filing made public moments ago, NPR states:

“The message referenced a proposal to condition Commission approval of the XM-Sirius merger on the contemporaneous initiation of an expedited notice and comment proceeding regarding the inclusion of HD receiver capability in satellite receivers. NPR fully endorsed this proposal as an essential means of assuring the broad availability of local HD services to the public.”

9 Responses to “HD Off The Table… For Now”

Isn’t that just a proposal to condition the merger on a new docket being created? This is in no way confirmation from the FCC of doing so. In fact, I don’t see how this has anymore weight than terrestrial radio asking for the HD inclusion to be a condition of the merger approval.

They can essentially scream until their lungs give out, but if Tate has already decided to move forward without it, what makes you think she will suddenly decide to say yeah sure we’ll make it another docket.

And if this docket is created, we aren’t going to find out anything that we didn’t already know. Pioneer, and the car companies are going to come out and say, this is a ridiculous proposal. And radio is going to say something along the lines of “WAAAH WAAAH WAAAH”. A majority of the commissioners decided it wasn’t necessary to move forward with, pack up your circus NAB and move on to the next town, royalty-ville.

By Nat Worden Of DOW JONES NEWSWIRES XM Satellite Radio Holdings Corp.’s (XMSR) shares are trading nearly 13% below Sirius Satellite Radio Inc.’s (SIRI) offer, even as the deal appears closer to completion than ever before. While that spread may seem attractive, traders say it likely reflects an inability to hedge the bet by shorting Sirius shares. Without that hedge, securing profits on the all-stock deal becomes more difficult, as the return is threatened by any drop in Sirius’ share price. “If you want to punt and bet that both stocks go up when the deal closes, you can buy XM and hope that Sirius goes up, but that’s a much riskier proposition,” says Roy Behren, portfolio manager at Westchester Capital Management, which runs merger arbitrage mutual funds and hedge funds. Investors can buy shares of XM in hopes that shares of Sirius hold their ground or go higher, but that wouldn’t be an arbitrage play. Meanwhile, recent declines in shares of Sirius amid favorable merger news – the stock is down nearly 19% just from its high Thursday – show that it’s a big gamble. Sirius shares recently traded at $2.24, down 7.4% Friday, while XM Satellite traded at $9.13, off 5.9%. The stocks are selling off despite indications that the companies are close to securing the final regulatory approval needed to merge. The sell-off may reflect concerns that the concessions the companies reportedly needed to make to garner government approval may prove onerous to the merged company. Under the deal’s terms, Sirius is proposing to swap 4.6 shares for each XM share. Based on Sirius’ recent stock price, the deal values XM shares at about $10.30, nearly 13% above XM’s recent price. Normally, an arbitrager would borrow 4.6 shares of Sirius and sell them short for every share of XM they buy. This way, traders can lock in the spread and profit when a deal gets done regardless of how Sirius shares trade within the ebb and flow of the broader stock market. The difficulty in shorting Sirius shares comes from its already decent-size short position, representing 11.6% of its float, according to FactSet Research, and new rules handed down from the Securities and Exchange Commission in 2004 designed to crack down on an abusive practice known as naked shorting. “Sirius shares basically cannot be borrowed anymore,” Behren says. “In fact, stock loan departments are recalling Sirius borrows, so people who have the trade set up need to cover their Sirius shorts.” Short-selling, or selling borrowed shares in hopes that the price of the stock will go down so they can be replaced later at a cheaper price, is a common, legitimate and sometimes highly profitable practice on Wall Street. However, when traders place short bets before bothering to actually borrow shares, or even making sure shares will be available for borrowing, it’s known as naked shorting. It results in the total number of shares sold short on a stock exceeding its float, the total number of shares available for trading. Essentially, naked short-sellers are trading shares that don’t exist. In order to curb this practice, stock exchanges are now required to compile a so-called threshold list of heavily shorted stocks that are more likely to be involved in naked-shorting transactions. Traders looking to place a short bet on a stock on the threshold list is either turned away by their brokers or forced to pay a premium price when shares are available to borrow. Sirius shares are currently listed on the Nasdaq Stock Market’s threshold list. Representatives at the satellite radio company and the stock exchange could not be reached for comment.

I just read that Sirius is on a threshold list that does not allow naked shorting. Because of this hedgers cannot short Sirius and buy Xm to bring it up to the 4.6 difference. They are afraid that something in the deal to approve will be horible for the company and cause Siri to go down to make the 4.6 spread instead of Xm going up.

Can’t someone of influence make the statement that the deal will not be a killer because if naked short sellers who are presently holding the siri shorts are forced to buy them back but not to short again, there should be an tremendous uptick that should last as shorting will become more difficult. Xm should also rise at the same time. It seems to me that all of the shorters today should be heading for the door to avoid the rush.

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